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Home > Business/Finance > Diversified Services > Shipping & Logistics
South Africa Freight Transport Report Q3 2008
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Transnet, the South African freight logistics group, which operates the country’s ports, is consideringcontainer terminals for the ports of Durban and Richards Bay. Imports and exports are predicted to riseand the country will require ports with expanded capacity to be able to handle this growth. CEO MariaRamos said that the company would have to make a decision over the next eight to 12 months on whethera new container facility should be located at Durban's Bayhead or Richards Bay. Results from afeasibility study at Bayhead are currently being analysed, regarding the viability of building a newterminal at the facility with a capacity for 6mn containers a year. Work on the project would include anextension of the port and the creation of a new basin to service larger container vessels.
A study is currently underway for the possible construction of new container terminal capacity atRichards Bay, which would see a phased development for an extra 5-6mn containers a year. Transnet hasalready budgeted for infrastructure works at Durban over the next five years. Approximately ZAR594mn(US$73.7mn) has been set aside for the development of a new container terminal at Durban's Pier 1 andanother ZAR286mn (US$35.5mn) for work on the Durban container terminal. The Durban containerterminal is the biggest and busiest in the Southern Hemisphere and handles approximately 65% of SouthAfrica's seaborne container traffic. Infrastructure modernisation is currently underway at Richards Bay.Transnet has budgeted ZAR732mn (US$91mn) over the next five years for refurbishment and upgrades tothe facility's dry-bulk terminal. Richards Bay handles the majority of South Africa's bulk cargos andboasts the world's biggest coal terminal. Expansion at one of these South African ports will be required ascontainer traffic is growing and Transnet predicts growing volumes of 12% to 15% in the Durban/Richards Bay area. BMI believes demand for coal and other commodities will underpin prospects forSouth African shipping. In this latest South Africa Freight Transport Report, BMI concludes that freightcarried by sea in South Africa is set to increase at an annual average rate of 6.5% over the next five years,ahead of the general rate of GDP growth.
Various factors support this prediction. Despite the global credit tightening and some local difficulties,the outlook for both domestic economic growth and exports is reasonable. We expect that the economywill grow at an annual average rate of 4.7% across the 2008-2012 forecast period, with foreign traderising by 13.7% a year in value terms. There is demand for transport services; consumption hasmaintained the need for import growth; export shipments of gold, platinum group metals, chrome,manganese and coal have necessitated increased freight services. Real GDP growth will also be boostedby South Africa’s plans to foster regional expansion in southern Africa, and this entails improving andextending the transport network.
We expect road haulage to grow faster than GDP, although poor road quality in some areas will be arestraining factor. Rail freight will lag just behind the economy’s general growth rate due to an ongoinginvestment shortfall, and despite current catch-up attempts. Sea freight will be ahead of GDP, supportedby port-expansion plans and the current attempt to persuade shipping companies to re-flag their fleets,joining the South African merchant marine. Airfreight has expanded relatively slowly in recent years,although the expansion of low-cost carriers and an increasing focus on the African regional market shouldinject some extra dynamism in the forecast period. Combining all these factors, our conclusion is thattotal freight volume across the different modes, measured in million tonnes-km, will rise by an annualaverage of 5.9% in the 2008-2012 forecast period.
South Africa’s overall freight rating, at 68.5 out of 100, is above the average for the Middle East andAfrica (MEA) region. It scores well in terms of political and economic factors and in its regulatorybackground, but its record in relation to historic and forecast growth in foreign trade and in transportremains relatively weak. By the very nature of the industry, many of the problems associated withreforming transport network, facilities and services have to be considered over a medium-term timeframe.
According to our latest estimates, the total value of transport and communications GDP will rise toUS$33.8bn in nominal terms by 2012, representing 8.2% of South Africa’s GDP.
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